If a corporate insider is spending millions on company stock, it’s often worth taking a closer look. Insiders are some of the most informed participants in the market and their trades can provide valuable investment insights.
In this report, we are going to highlight a large insider purchase at Best Buy Co Inc (BBY:US). Best Buy is a leading retailer of consumer electronics that operates in the US, Canada, and Mexico. Its goal is to enrich lives through technology. The company is listed on the New York Stock Exchange and currently has a market capitalization of $25.2 billion.
Best Buy Co Inc: Insider Buying
Our data shows that on December 3, Chairman Patrick Doyle bought 20,000 BBY shares at a price of $104.47 per share. This trade cost the insider $2.1 million and increased his holding to 51,856 shares.
Mr. Doyle has considerable experience in the consumer sector. Previously, he was CEO of Domino’s Pizza, the global leader in the pizza restaurant industry. During his time as CEO of Domino’s, Mr. Doyle transformed the company digitally, and in the process, increased the share price by over 2,100%.
He also has experience in the investment industry. Currently, he is Executive Partner at The Carlyle Group, a private equity company that has assets under management of around $300 billion. This background means he is likely to have a good idea of Best Buy’s intrinsic value.
What’s interesting about this purchase from Mr. Doyle is that it has increased the size of his holding by 63%. This suggests he is very confident the stock is set to move higher.
Share Price Fall
Best Buy’s recent Q3 results beat expectations.
For the period, revenue came in at $11.91 billion, above the consensus forecast of $11.58 billion. Meanwhile, earnings per share came in at $2.08 versus the consensus estimate of $1.91 per share.
However, the share price fell significantly after Best Buy posted its results due to the fact that fourth-quarter sales guidance was below analysts’ estimates. For Q4, the group expects comparable sales growth of -2.0% to +1.0% due to product shortages and supply chain issues. Fears over the new variant of the coronavirus, which impacted shopping sales in the US over Black Friday and Cyber Monday, pushed the share price down further.
The big buy here from Chairman Patrick Doyle suggests that he expects the stock to bounce back. We see this insider buying as a bullish indicator.